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PBOC Cutting Foreign Exchange Reserve Ratio to Curb Yuan Weakness
Published on: 2022-04-26
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China's central bank said on Monday it would cut the amount of foreign exchange banks must hold as reserves, a move aimed at slowing the depreciation of the yuan, which is at its weakest levels in a year.
 

The People's Bank of China said it would cut the foreign exchange reserve requirement ratio (RRR) by 100 basis points (bps) to 8% beginning May 15, to "improve financial institutions' ability to use foreign exchange funds", according to an online statement.
 

The PBOC previously raised the FX reserve requirement ratio for financial institutions by 200 basis points in December 2021, to rein in a rising yuan and make it more expensive for banks to hold dollars.
 

The cut in foreign exchange reserve ratios is expected to lend the tightly managed currency some support, by freeing up dollars banks need to maintain with the central bank.
 

The yuan CNY=CFXS has fallen furiously, shedding more than 3% against the dollar in the past month and hitting a one-year low of 6.5775 on Monday, on concerns over a worsening economic growth outlook caused by strict COVID-19 lockdowns in Shanghai and major cities and the loss of a yield advantage versus the dollar.
 

降低外汇准备金率1个百分点!

4月25日,离岸人民币兑美元汇率盘中跌破6.6关口,为2020年11月以来首次,日内跌幅超1%;在岸人民币兑美元汇率盘中跌幅一度高达900个点。
 

不过,央行也果断出手稳定汇市预期。就在离岸人民币兑美元汇率跌破6.6关口不久后,人民银行官网发布消息,自5月15日起,下调金融机构外汇存款准备金率1个百分点,即外汇存款准备金率由现行9%下调至8%。

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